Radio Waves Podcast #177

Radio: June 16, 2017

Ever since Cumulus Media stock hit the proverbial toilet -- the stock is currently sitting at just over 50 cents per share even after a reverse stock split designed to keep the price above $1 ... and is far from it’s (reverse split equivalent) peak of $406 per share in late 1999 -- I’ve been suggesting a way to save the company-owned stations and save radio at the same time.

Cumulus owns over 400 stations nationwide including KLOS (95.5 FM) and KABC (790 AM) locally, along with Westwood One and other content creation companies.

The idea is simple: Buy Cumulus and dismantle it. The current market cap of $14.94 million means the entire company is worth less than one Los Angeles station alone; my plan involves buying the company outright, selling off the vast majority of the stations, and pay off the $2+ billion in debt that the company owes from past ill-advised mergers and acquisitions. 

Even estimating a low average selling price of $11 million per station for those I’d sell, I figure I’d be left with about $4 billion to run my ten stations, ten being the total number of stations any company should be allowed to own if I had my way. I could hire the DJs, programmers and support staff, run the best promotions, and destroy my competition.

People said I was crazy ... except that they couldn’t explain why. But a recent move by Cumulus itself proves the worthiness of the plan: the company adopted a “poison pill” triggered when anyone or anything purchases more than 4.9 percent of the company in the open market. According to InsideRadio.Com:

“Once activated, Cumulus’ poison pill would award shareholders with incremental shares of stock or give them the option to buy shares at a significant discount if the company becomes a takeover target. Either action would effectively dilute the acquirer’s position to 50% or less of what they’ve acquired.”

So that’s that ... unless I can work with the Board of Cumulus for a friendly takeover. The question becomes: why did they do that? Well ...

Lew Dickey’s Back

The man who helped create Cumulus Media through mergers, acquisitions and (in my opinion) horrendously bad skills at running a radio company, who was forced out of Cumulus about 18 months ago, is back. Backed by the same company that gave him the money to build Cumulus into the dying company it is today.

Why Macquarie Capital would give Dickey any financing at all is a true mystery, but they did. And now Dickey has $207 million to play with using his new company, Modern Media Acquisition Corp. The purpose? To acquire and run a company in media, entertainment or related marketing.

Could that be why Cumulus suddenly instilled a poison pill? To keep Dickey out? I’m not a betting man, but ... you can bet on it.

Better Signal

Listened to KABC lately? You can hear them. Better than in years.

When they moved from the longtime transmitter site on La Cienega to a location that now shares -- triplexes -- with two other stations not far from Dorsey High School, the signal seemed to disappear. Vastly inferior to the La Cienega location, at least initially.

It seems the engineers have worked some magic, though, via a power increase from 5000 watts to 6600 daytime and 7900 nighttime. KABC is now coming in loud and clear throughout the area I live and travel even at night, better in San Pedro than in years ... maybe decades. Sound quality for analog is vastly improved as well. Hopefully this will allow the station to better compete; there is some great content that in the past was prone to interference ... of the electronic kind.

Disney Country

I can hear you now: Why doesn’t Radio Disney play country music? Wait ... you mean you didn’t? Well, you’re in luck anyway: KDIS (1110 AM) has changed to KRDC: Radio Disney Country. Country music sanitized for the family.

I like country music. It’s all about trucks, women, drinking and fighting. I’m not sure what Disney can actually play here.

Regardless, they are doing it. They even added an FM translator, which is a fancy word for a low-powered FM transmitter that helps extend the AM signal to parts of the city not covered well by the AM signal. In this case on 99.1 FM in Irwindale. Meaning, due to the strong signal of KGGI/Riverside (99.1 FM), a few blocks near the translator site in Irwindale and nowhere else.

I don’t see Go Country (KKGO, 105.1 FM) being affected at all.